GlaxoSmithKline has said it plans to take a majority stake in its Nigerian unit for around $97m, continuing its strategy to expand operations in emerging markets.
Nigeria’s pharmaceutical market was valued at around $921m last year and is set to grow around 15 per cent in 2012, according to Business Monitor International data, which predicts in its latest report that multinationals will experience “short-term difficulties but prosperous growth in the long term”.
The pharmaceutical market has been undermined for years by high levels of medicines counterfeiting and corruption among healthcare officials, although the government has been cracking down on illegal activity in recent years.
For example, counterfeits are now claimed to represent around 5 per cent of the market, according to government figures released earlier this year, down from a staggering 40-70 per cent (depending on the therapeutic class) in 2001.
GSK’s chief strategy officer David Redfern said the move reflected GSK’s “confidence in the continuing growth prospects of the business”, which recorded sales of 21.5bn naira ($136m) in 2011 and has been growing at more than 20 per cent a year.
GSK Nigeria sells a portfolio of consumer health brands, including Panadol, Sensodyne, Horlicks and Lucozade, as well as prescription medicines, such as antibiotics and vaccines.
GSK will buy 341m shares in GlaxoSmithKline Consumer Nigeria PLC at a rate of 48 naira ($0.30) per share, taking its stake in the unit up to 80 per cent from a little over 46 per cent.
Under Nigerian law, companies must be 20 per cent public-owned in order to qualify for listing on the national stock exchange.
GSK’s move follows other investments by overseas pharma companies in Nigeria in recent months, with India’s Nestor Pharmaceuticals and Ranbaxy Laboratories both announcing the construction of new manufacturing facilities to serve the domestic market.
Meanwhile, domestic drugmaker May & Baker has been negotiating the construction of a vaccine facility in partnership with the Nigerian government to reduce reliance on imports.